UK residential property prices fell in April, latest real estate index shows

Analysts had expected a rise of around 0.5% but instead prices fell 0.1% and much of that may have been due to uncertainty in the run up to the UK general election. Halifax said it now expects property prices to be flat for the rest of 2010.
 
While the annual increase was the largest increase in the annual rate of change since October 2007 and prices are 8.7% above their April 2009 trough, the average house price is 16% below its August 2007 peak.
 
‘House prices were broadly flat in April, declining by just 0.1%. This followed a 1% increase in March. The underlying rate of house price growth has slowed in recent months following the relatively sharp rebound, albeit from a low base, in the second half of 2009,’ explained Halifax housing economist Martin Ellis.
 
Commentators have suggested that much of last year’s surprise real estate recovery was driven by a shortage of properties on the market, and Halifax said an influx of sellers had pushed up stock levels and was likely to have an impact on future growth.
 
‘The improvement in house prices since spring 2009 has encouraged more people to try to sell their property. New sales instructions have risen, helping to push up the stock of unsold properties in recent months,’ said Ellis.
 
‘As a result, the imbalance between supply and demand is easing somewhat. Our view is that house prices will be flat during 2010 as a whole,’ he added.
 
The Halifax figures are in contrast to the latest figures from rival lender Nationwide which showed a 1% increase in property prices and a return to double digit growth year on year. But Nationwide cautioned that it was unlikely that annual house price inflation would remain in double digit territory during the coming months, pointing out that the quarterly rate of growth, which is considered to be a smoother indicator of market trends, was continuing to decline.
 
Howard Archer, chief UK economist at IHS Global Insight, said continued tight credit conditions, affordability problems and the fact that more homes were coming on to the market meant it was unlikely prices would make significant gains over the coming months.
 
‘If there is extended political uncertainty arising from the hung parliament this could impact negatively on the housing market. Consequently, we believe that house prices are likely to be erratic over the coming months and could very well be no more than flat overall through the rest of the year,’ he said.